Good morning. Thank you for waiting. Welcome to our earnings presentation of Ultrapar, to present the results of the second quarter, 23. There is also a simultaneous webcast that may be accessed through Ultrapar's website at ri.ultra.com.br, and MZiQ platform. The presentation will be conducted by Mr. Rodrigo Pizzinatto, Ultrapar's Chief Financial and Investor Relations Officer. The Q&A session will have also with us, Mr. Marcos Lutz, Ultrapar CEO, and the CEOs of the businesses, Mr. Tabajara Bertelli, Décio Amaral and Leonardo Linden. We would like to let you know that this event is being recorded and all participants will be in listen-only mode during the company's presentation. After Ultrapar's remarks, there will be a question and answer question. At that time, further instructions will be given. Should any participant need assistance during this call, please press star zero to reach the operator.
We remind you that questions which will be answered during the Q&A session may be posted in advance in the webcast. A replay of this call will also be available for seven days immediately after it's finished. Before proceeding, we would like to emphasize that forward-looking statements are being made under the safe harbor of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on the beliefs and assumptions of Ultrapar management and on information currently available to the company. They involve risks, uncertainties, and assumptions, because they relate to future events, and therefore, depend on circumstances that may or may not occur in the future. Investors should understand that general economic conditions, industry conditions, and other operating factors could also affect the future results of Ultrapar, and could cause results to differ materially from those expressed in such forward-looking statements.
Now, I'd like to turn over to you, Mr. Rodrigo Pizzinatto. He's going to begin the conference. Please, Mr. Pizzinatto, you have the floor.
Good morning, everyone. It is a pleasure to be here once more to talk about Ultrapar's results. Starting on slide number two, I remind you that at this moment, both the earnings release and this presentation consider Ultrapar's data from continuing operations in 2023. For 2022, the company's data is presented in the pro forma view, considering the sum of continuing and discontinued operations as disclosed throughout last year, unless or otherwise indicated. Moving now to slide number three, with Ultrapar's consolidated results. You can see in the chart in the upper left side, our recurring EBITDA from continuing operations totaled BRL 933 million in the second quarter of 2023, 15% lower year-over-year, due to the lower EBITDA in Ipiranga, partially offset by higher EBITDA of Ultragaz and Ultracargo.
Ultrapar's net income was BRL 239 million in the second quarter, 48% lower year-over-year, due to the lower EBITDA from continuing operations, the capital gain of BRL 289 million from the sale of Oxiteno in the second quarter of 2022, and the higher depreciation and amortization. These effects were attenuated by lower net financial expenses, despite the higher CDI, mainly due to the positive one-off result of BRL 47 million in mark-to-market of hedges in this second quarter of 2023, compared to the negative one-off of BRL 272 million in the second quarter of 2022. Our board of directors, as we have already informed, approved the payment of BRL 274 million in interim dividends, referring to the year 2023, equivalent to BRL 0.25 per share.
Investments from continuing operations totaled BRL 385 million in this second quarter, 5% lower than that of the second quarter of 2022, mainly due to lower investments at Ultracargo and Ipiranga, partially offset by higher investments at Ultragaz. We had an operating cash generation of BRL 898 million in the second quarter, compared to a generation of BRL 376 million in the same period of last year, resulting from lower investments in working capital on the back of fuel price reductions. The operating cash generation in the second quarter was BRL 1,199 million, if we exclude the reduction of BRL 301 million in the draft discount balance. Moving now to slide four to talk about our liability management.
We ended the second quarter with a net debt of BRL 8 billion, a reduction of BRL 252 million compared to March 2023, due to the operating cash generation, even if we consider the reduction of BRL 301 million in the draft discount balance in the second quarter. Our leverage remained practically stable at 2.1x net debt to EBITDA in June 2023, on the back of the lower last twelve month EBITDA from continuing operations, despite the reduction in net debt that I've just mentioned. I'd like to point out that the numbers of our net debt do not include pending receivables of BRL 1.1 billion related to the sales of Oxiteno and Extrafarma.
We raised BRL 1.08 billion in agribusiness receivable certificates at the cost of 104.8% of the CDI. Of that, BRL 680 million in June and BRL 400 million in July, which extends our debt profile at the yearly lowest cost for equivalent issuances in Brazil. We've included at the bottom of this slide, a table with the total amount of draft discount and vendor lines, as well as pending receivables from the sales of Oxiteno and Extrafarma, all lines highlighted in our balance sheet. The net data of June 2023, adding the draft discount, vendor, and divestment of receivables, would be BRL 8.8 billion, which is BRL 1.746 billion, lower than the balance of June 2022 and one year ago.
Moving now to the next slide, slide number five, to talk about another excellent quarter of Ultragaz. The volume of LPG sold in the second quarter was 4% higher year-over-year, due to the 2% increase in the bottled segment on the back of greater market demand. The bulk segment, in turn, grew by 8%, with higher sales, mainly due to industries. Ultragaz SG&A in the second quarter of 2023 was 15% higher than that of the second quarter of 2022, due to three main factors. The first refers to higher expenses with personnel, mainly collective bargaining agreements and variable compensation, in line with the progression of results, and a larger headcount due to the recent acquisitions. The second factor is the higher expenses with freight, resulting from higher sale volumes. Additionally, we also had higher expenses with sales commissions.
The disposal of assets line totaled BRL 7 million in this second quarter, as a result of the concentration of operating asset sales. With that, Ultragaz EBITDA totaled BRL 405 million, 55% higher year-over-year. This growth is mainly explained by efficiency and productivity initiatives implemented in the last quarters, by higher sales volume with better mix, and by inflation passed through despite higher expenses. For the current quarter, we expect Ultragaz to maintain its good operating performance with seasonally stronger volumes. Moving now to slide six, to talk about another great quarter of Ultracargo. The company's average install capacity was 955,000 cubic meters in the second quarter of 2023, stable in relation to the second quarter of 2022.
The cubic meters sold increased by 6% due to increased handling of fuels in Santos and Itaqui, mainly resulting from higher spot sales, especially diesel, as a consequence of greater supply in the market, in addition to higher handling of chemicals in Aratu. Ultracargo's net revenues were BRL 257 million in this second quarter, 19% higher year-over-year, as a result of higher cubic meters sold, the spot sales I've just mentioned, and higher tariffs. Combined costs and expenses were 14% higher than those of the second quarter of 2022. As a result of higher personnel expenses, mainly collective bargaining agreement and variable compensation, also in line with the progression of results. We also had higher expenses with advisory and consultancy services linked to expansion projects and maintenance costs.
In the second quarter of 2023, Ultracargo concluded a sale process of its stake in União Vopak at the Paranaguá terminal, which resulted in a positive effect of BRL 8 million in the share of profit of subsidiaries, joint ventures, and associates line. Ultracargo's EBITDA with that totaled BRL 161 million in the quarter, a growth of 24% year-over-year, due to higher capacity occupancy with profitability gains, higher tariffs, productivity and efficiency gains, and the share of profit of subsidiaries result I've just mentioned. EBITDA margin was 63% in the second quarter, three percentage points above that of the second quarter of 2022. For the third quarter, we expect Ultracargo to continue its good operating performance, with results similar to those of the previous quarters. To conclude this presentation, moving now to slide seven, let's talk about Ipiranga's results.
Volumes sold in the quarter remained stable compared to the second quarter of 2022, with a 7% growth in the auto cycle, with greater share of gasoline to the detriment of ethanol in the product mix. On the other hand, diesel fell by 5%, mainly due to the strategy of lower sales to the spot market during the period. We ended the second quarter with a network of 6,281 service stations, 245 stations less than that of March 2023, which is in line with our strategy of managing the legacy of low-potential service stations' review that should be concluded in this third quarter. A total of 76 new service stations were added to the network, with an average volume contribution of 366 cubic meters per month.
On the other hand, 321 service stations were closed, with an average volume contribution of 43 cubic meters per month. Despite the reduction of the number of service stations, the net volume effect was positive, reinforcing our strategy of higher density and improve the standards of our service station network. In addition, we ended the quarter with 1,553 ampm stores, with same-store sales growth of 13% year-over-year. Ipiranga's SG&A decreased by 5% in the quarter, mainly due to lower freight expenses on the back of reduction in diesel prices and logistics optimization after the vehicle fleet reduction, partially offset by higher provision for doubtful accounts.
The other operating results line totaled negative BRL 211 million in the quarter, compared to a negative BRL 130 million in the second quarter of 2022, mainly reflecting higher costs with Brazilian carbon tax credits and the constitution of extemporaneous tax credits in the second quarter of 2022. The disposal of assets line totaled BRL 31 million in the quarter, resulting from the sale of six real estate assets. Ipiranga's EBITDA totaled BRL 479 million in the quarter, 43% lower than that of the second quarter of 2022. Recurring EBITDA was BRL 448 million in the quarter, 41% lower year-over-year. The lower EBITDA reflects two main factors. First, margins pressured by fuel cost reduction throughout the quarter and consequent inventory losses.
I remind you that in the second quarter of 2022, we had few cost increases and inventory gains. The second factor was a worse commercial environment in the second quarter of 2023, due to the oversupply of imported products and higher local production. For this third quarter, we expect seasonally higher volumes and a gradual recovery of profitability as the market normalizes. With that, I now conclude my presentation. I appreciate your interest and attention, and now let's move to the Q&A session, in which we are available to answer your questions. Thank you.
Now going to open for questions, and this is only to investors and analysts. If you have a question, please press star one. If your question is answered, you may remove yourself from the queue by pressing star two. Questions will be taken in the order they are received.
We'd like to ask you to pose your question, and that when posing your question, you pick up your headset to provide optimal sound quality. Please hold while we wait for questions. If you are following the conference call via webcast, just click on Questions to the Host to send your question. The first question comes from Thiago Duarte of BTG Pactual. Thiago, you have the floor.
Hello, good morning. Thank you for the opportunity. I have two questions focused on Ipiranga, and the first one, I think it's alluded to the last sentence that Rodrigo pointed out about expectations for the third quarter, gradual recovery of margins. What are the assumptions for the gradual recovery to happen in the second quarter?
As you've pointed out, there was the impact of loss on inventory levels and the impact of the market, which was, had a higher demand than initially predicted. Considering these two drivers that have had a negative impact on the margins of the second quarter, I would like to hear you about how you've analyzing those drivers. Is there an expectation of a change in prices, in recovery of inventory levels, or do you expect the market not to have a higher offer? And if, yes, why? A second question, more in the long run, I remember the first notes of Marcos and Ricardo in a conference call in the past, where we discussed the turnaround of Ipiranga being an issue of software, not hardware. What our current position is in terms of recovering the software, the start, the strategy?
We've seen results with the disinvestment of some of the stations. They seem to be positive. What else is missing? Of course, considering what's under your control, so that the value proposition of Ipiranga keeps on improving concerning what we have observed in recent years. Thank you very much.
Good morning, Thiago. This is Linden speaking. Thank you for your question. First, let's talk about expectations. We have better expectations for the third quarter. The second quarter was very challenging for the reasons that you've pointed out. Rodrigo shared them with us quite clearly. July was much better than June, even though still slowly recovering. In June, the market was affected for the same reasons that had impacted the second quarter. What we are observing, and concerning the variables you've pointed out, there is not going to be an impact on inventory losses.
We do not expect to have price reductions. Quite to the opposite, the market is pointing towards increases. There is also a volume recovery because of the problems of the market of having excessive offer, excessive product. Our network is operating better in terms of volume in the third quarter, and as a consequence, it improves margins. In the third quarter, we expect to have better results than the second. Now, concerning software against hardware perspective, as you pointed out, we are maintaining our four-pillar plan. I would say we have evolved significantly in some of them. In others, we are still working. It's a work in progress, for example, logistics and this is not big news. You know what I'm talking about. But I am quite confident with what we've achieved, and the work in the second quarter shows that.
We have managed to come up with business solutions, even during trying conditions. Therefore, I think we are moving ahead, following the plan, and the results are quite positive to Ipiranga, even though that hasn't really completed our full cycle of recovery.
That's great. Thank you very much for your answer. The next question comes from Leonardo Marcondes, this of Bank of America.
Good morning. Thank you for taking my questions. I have two questions. Just a follow-up based on what Duarte has just asked. First, I would like to know more about Ipiranga and the market. Could you please tell us about the availability of products in the market? How availability affects your strategy of commercialization for clients, which are more exposed to the spot market. The second question concerns Ultragaz. I'd like to ask you to tell us more about bulk. We've seen this bulk segment has gained more and more relevance in terms of volume. Could you please elaborate on how this segment has impacted your margins? What are the competitive advantages of Ultragaz in this specific segment? Now, piggybacking on Duarte's question, Linden said that July was marginally better than June.
June, was it a more challenging month, or was it more positive to Ipiranga within the second, the third quarter? Morning! Your question about availability is very timely. Ipiranga has no problem of product availability. Ipiranga has no problem of supplying regular customers. I don't anticipate anything that would say we eventually would get problems in supplying our regular customers. We keep on working in the spot market, that's White Flag and the branded ones. The spot market is much more exposed to international prices because it's a marginal model, so to speak. There will be occasions in which, unless the market has a pricing answer that justifies the international cost, it will be very difficult to develop another segment.
Brazil has just settling down in this model, and we are still actively involved in it, but understanding that this is a market that is more exposed to international prices. Once again, because this is a very important point, I cannot speak of all suppliers in Brazil, but concerning Ipiranga, there is no problem of supply, no problem of shortage of product. Concerning the month of July, as I said, July was marginally better for Ipiranga, but a very small improvement, considering what we expect for the whole industry. We've been dealing with lower challenges and trying to come up with solutions that can offset market difficulties. Said that, July was marginally better compared to June and to May.
Hi, Leonardo, this is Tabajara Bertelli, speaking on behalf of Ultragaz, about our position in bulk.
This is a long-term journey, you probably know, and for both segments, but focusing on bulk, I think there are two possibilities here, things that we've been focusing consistently. We want to be close to our customers, we want to understand and realize what their needs are. We've been launching new solutions for customers, that has meant significant improvement. You've also aware of recent investments which have led to operational efficiency, things which are really relevant to us. We want to expand, but with operational efficiency, quality of operation. It is a long-term process. There's still a lot to be done, but this is one of our focuses here, we've been paying close attention to it.
Great. Thank you very much for your answers.
The next question comes from Regis Cardoso of Predictance.
Hello, good morning. I have some questions to Linden. There is also a follow-up of this last topic. Trying to look towards the future, Linden, in your answer, you said that the spot market is a market which has prices based on international scene. My question is, what have you anticipated in terms of domestic supply, considering this context, where we can see that discrepancy of the price volatility and how it's incorporated by Petrobras? It is a market that's still short, and it needs importation to supply some specific regions where there is less refining capacity, especially in the north and northeast of Brazil. Linden, tell us, how will you anticipate the supply in the future and how to get adapted to it?
As a teaser, does it make sense to keep on having your own stations with branded stations, if that will mean excessive capacity, considering your Petrobras quota? This is the question. About the disinvestment of some of the stations, what the impact that it has had on volumes, do you use any metrics of a cubic meter sold per station, comparing that to new stations? Just to understand, really, how many more stations would have to be sold for you to complete your strategy. Thank you.
Good morning, Regis. Petrobras is still the main supplier of Ipiranga, regardless of the circumstances. This is the partner that gives us really the confidence of supply that we need to operate, and this is going to remain so. Petrobras does not supply the whole market.
There is a deficit, which means imports, and Ipiranga will keep on importing the product. We've got ready for that. We have our supply area ready to purchase from all over the world. We are going to do it competitively, and I really think that the Brazilian market, the Brazilian market pricing, will get adjusted to the model in which you have Petrobras price and imported prices. Marginal molecules are more exposed to the spot volume, and this is how we have addressed it, and this is how the market will get settled. Whether we should keep on investing or not, well, interesting point, because investments of quality are always worth making, because there is a natural churn in the network, and you naturally make replacements. Just referring back to your point of the closure of stations, it's part of the process.
Even though we are dealing with the long tail that we knew you had to close, it's part of our network activities. We are always going to make investments of quality, but as we've said, right from the beginning, our investments are really, we are raising the bar of the quality of investments. We do that because we want to improve continuously our network. If we get the average of our stations in 2021, it was below 170 cubic meters. The average today is over 220 cubic meters. That's the average of our current stations. It means healthier business. Here we have investments over 330 cubic meters and some disinvestments, on average of 40 cubic meters. Yes, it's worth investing, provided that they are investments of quality. Otherwise, it would make no sense.
I think I've answered all your questions, but if you want to hear anything else, please let me know.
No, that's okay. Thank you very much. Great results, guys.
The next question comes from Matheus Enfeldt, from UBS.
Hello, good morning. Thank you for taking the questions. The first one about capital allocation and diversification. Recently, some investments. There is the whole know-how of Ultragaz. This kind of format or companies, what we've been analyzing, is there still room for purchasing anything larger, with different diversifications? Thinking about your process, really, more than anything specific. My second question about Ultragaz. Margins are still impacting the results, but it has been a consistent surprise to the market. There are two points about maintenance of margins, thinking in the long term, much more than, let's say, 2024.
We've been hearing about the regulatory concerns, about the regulations over the gas bottling and how are you dealing with the regulatory risk? Secondly, do you think that these margins levels would open the possibility of replacing sources, maybe going more into natural gas when price of fuels going down? Wouldn't be a risk of margin just to focus on this specific gas applications you have?
Thank you for the questions. In terms of capital allocation, we've already told you the, the experience that we have today, because this is the year that we just put an end to the level of investments to go into further leverage and investments. The activity of M&A is constantly, really, gaining more momentum and considering possibilities.
We believe in smaller acquisitions, as you've pointed out, as accelerators of strategies of our both companies. Ipiranga does it as well, with its network of stations or, let's say with terminals in other operations. Our strategy is just to do it, to speed up the portfolio, but always analyzing better opportunities with greater volume. There is nothing mapped so far. We really try to focus on enhancing our analysis and being constantly exposed to what's happening in the market. 2023 is the year where we strengthen our operations. We are constantly talking about the volatile- volatility of the market, but we've been really expanding our operations. We are a much better company than we used to be two years ago.
Really creating that critical mass that allows us to do other things, we are still more focused on creating muscles rather than taking any major leaps. Hope I have answered your question. Well, I think you made two questions to Ultragaz. First, about the regulatory landscape. In our opinion, regulations here in Brazil are very modern, probably one of the most updated in the world. It, it's been in place for over 20 years. It gives the freedom of choice for end consumers, for specific cylinders and autos. The, the resellers' operation has a very competitive dynamic. We can see space in reducing some users because LPG is not there yet, because of regulatory limitations. Our expectation is to have that expanding further, bringing us some additional potential to LPG.
We can get that with regulations, and it really makes us operate very safely. We have top-quality products, by doing that, companies can make investments. Ultragaz invests significantly every year in acquisition and requalification of tanks and cylinders. Very appropriate operation, always with room for, let's say, improvement. When you talk about margins and sustainability, it takes us back to the previous question about the use of bulk and the bottled segment, as we've told you in previous meetings, Ultragaz is much closer to customers adding service levels to the product. It's not a company that sells only commodity. We brings innovation, new uses, operational efficiency, which is an important differential for us, taking us to different markets.
LPG in our operation has really evolved significantly because the end-to-end complete solution, not only of the molecule, has been highly considered, it has helped us expand our relationship with the customers. It's very important, in terms of resellers, closer relationship, really, with our customers. We observe the succession rates, the NPS of our customers. We are going more from a commodity company to a service provision company and going into a diversification company, also offering the products concerning energy. We've been building this platform of energy of the future. Still have got a lot to do, of course, we've shown a very consistent progression in this area.
Great. The next question by [inaudible] from Citibank. Hi, good morning. Thank you for taking my questions. Follow-up on Thiago Duarte's question.
Could you please tell us more about the pillars, the four pillars of the turnaround of Ipiranga? Which one is the most developed, which one is lagging behind? What are the difficulties you come across, and how long will it take for you to close all the doors, so to speak? I can see that the investment in stations is very successful. I don't know if it's an ongoing process or whether we are going to come to a halt differently. Secondly, concerning the CapEx, against the guidance, it seems that it's somewhat lagging behind. Do you expect any spillover, or will you reach the guidance of the year in all different fronts? Because Ultracargo seems to be the one which is taking longer to use its CapEx. Please, these are my questions. Thank you.
Good morning, Joaquin.
Concerning the disinvestment and the sales of our stations, we expect to finish this movement now in September, in this quarter, the bulk of it, at least. Four pillars. One pillar, competitivity. This pillar is very important to us, but in our, this is something ongoing in our operation. This is something that we have structured quite well. The pillar has been completed, and now we are going to keep on fine-tuning our policies to have stable competitive position and policies which are in sync with the market. The pillar of trading has evolved significantly as well. When we launched this pillar at first, we had no structure of trading at that time. Today, we have a very robust trading structure with the capacity to originate products wherever we are, always adding value.
It has contributed to reducing the issues we faced in the second quarter. Similarly to competitiveness, now we are going to just keep on focusing that as a critical issue for us. The next pillar, with engagement, has also experienced significant progression in the past 18 months. It has improved our relationship with the network at large. Our processes and policies are much more consistent, and this is very important for the network. We are closer to our resellers, which is something expected at Ipiranga. We've expanded the network. We have gained more space in our branded stations. It's a pillar to be maintained. The pillar with which we are still working on is logistics and operations, because it, it requires deeper changes of processes, and this is not the first time I mention it, I know.
I'm just being consistent with what was said in the past. It's clear that by the end of the year, we will have covered most of what we had intended to be our plan. There are very significant progresses, but the rollout for all over Brazil, for all our distribution bases, it takes time because we are deeply reviewing processes. As I told you, the part of selling the stations and disinvestments will be completed by September. Let's hear we talk about CapEx. Concerning CapEx, similarly to previous years, we just forecast, there is some seasonality of the investments in expansions and branded operations, concentrating more on the second half of the year. This year is not going to be different, because it's not a linear plan.
That's great. Thank you. Thank you.
If there are no further questions, I would like to hand it back to Mr. Rodrigo Pizzinatto for his closing remarks.
Let me thank you all for your questions and for your interest. Let me remind you that the questions that were submitted through the webcast will be answered by our investor relations team. On September 5th, we are going to have our Ultra Day, and I hope to have you all there with us. Thank you all very much.
Thank you. The earnings release call of Ultrapar is completed now. Please hang up now. Thank you very much. Have a nice day.